ZURICH, June 25 The Swiss government said on
Wednesday prospective home owners should no longer be allowed to
use pension funds as down payments for property, in a move it
hopes will dampen an overheated Swiss real estate market.
Ultra-low interest rates, immigration and Switzerland's
appeal as a safe haven for financial investors have helped drive
up mortgage lending, and Swiss officials have used a variety of
supply- and demand-side measures to fight rising property prices
since last February.
Swiss banks normally require roughly a fifth of the purchase
price of property in cash, funds which many home-buyers help to
finance out of their pension funds.
In a surprise move, the government said on Wednesday it
wants to close this loophole, partly to minimise the risk of
pensioners drawing welfare or other subsidies if their
retirement savings have gone towards property purchases.
"We hope for a certain dampening effect (on the housing
market) from this measure," Swiss economy minister Johann
Schneider-Ammann told Swiss broadcaster SRF.
The measure is part of proposed reforms to Switzerland's
pension system, and will also limit an existing option to draw
pension money early when setting up a new business. The
proposals require parliamentary approval.
The Swiss National Bank, hamstrung by rising housing prices
because it cannot lift interest rates due to a cap it has set on
the Swiss franc, has long fretted about rising Swiss house
prices and bank lending.
In January, the government doubled the level of capital
banks must hold against their mortgage book, on the advice of
the SNB, after an attempt last year to cool the housing boom did
not do the trick.
Swiss banks said on Tuesday they would tighten requirements
for mortgage loans voluntarily, hoping to preempt measures being
readied by the government, which fears the high debt levels
could provoke a crash if the economy went into recession.
Switzerland's home-owner's lobby criticised the Swiss
government's proposals on Wednesday, saying it would only widen
the gap between those who can afford property and those who
Home ownership is a luxury in tiny Switzerland, where the
alps cover nearly two-thirds of the country's surface. Only a
third of residents own their own homes, according to government
statistics, which is low compared to other countries.
(Reporting by Katharina Bart; Editing by Alison Williams)